welcome, everybody, to "power lunch." alongside kelly evans i'm tyler mathisen coming up, earnings everywhere big reports out before the bell. bigger reports even after the bell throughout the hour we're going to dig into the reports already published and get you set for those still to come. >> plus, president biden officially announces his 2024 presidential campaign. we'll dig into the economic

angles of second term from taxes to the latest on the debt ceiling. before that let's get a check on the markets near session lows with the dow down 307 points, the s&p 500 back below 4100. >> let's get to kristina partsinevelos in the house for a look at some of the big movers. >> like kelly mentioned a weakness across the board for fears of a slowing u.s. economy. we have yet to hear from the mega cap tech names and retailers set to report earnings in the days and weeks. shares of first republic making a lot of news right now, plunging over 40%. we'll bring first republic up in just a second as the worst s&p stock right now. it was halted as well. this is because there was a new bloomberg report that first republic is weighing up to $100 billion in assets sales long dated, of course the size of that sale is what is spooking investors its earnings report as well showed deposits that dropped 40% in the first quarter, but according to the company have stabilized the company plans to cut costs and bring the stock back up by slashing head count to roughly

20 to 25% in the second quarter. you can see shares are down 43%. there was a halt just this afternoon. now we can go to ups, raising the alarms with its biggest single day drop in more than eight years. shares down 9.5%, missed quarterly result stiltsz but the street is focused on management commentary that indicate sales volumes should continue to be under pressure as disposable income shifts away from goods to services full year revenue projections aren't improving ups guiding at the low end at $97 billion. wealth management fund northern trust corporation, down almost 10% right now, missed earnings, drop in deposits, drop in deposits meant lower management fees which hurt profits and that's why it's if i remember correctly the third worst player on the s&p 500 right now. >> thank you very much for more on the first republic story let's bring in david faber from the new york stock exchange. >> tyler, yeah, you know, the

story, of course, was just quoted in terms of bloomberg's is a story we brought people this morning in terms of the plan that first republic is undertaking to try to get assets off the balance sheet. they put a number on it, of course, the market reacting perhaps to that as well, but the overall plan is one that we went into in detail this morning and it would go along something like this you get the same group of banks that put in the $30 billion on the march -- on march 16th to then line up and say we will put together capitalization for a special purpose entity that will buy those loans and secure these from you at a higher level than they would be marked to market right now. perhaps still below where their book was or they were originally made and that would free the balance sheet up to have some repair you would get rid of the assets under paying while you're dealing wait deposit base you're paying an awful lot for, and then you would rehe can question tize and try to raise equity, a belief on the part of first republic it could do that were

it to be successful in the asset sale plan, and then you could go back to the business of really being a bank by making loans the problem is, it's not clear at all that any of the banks that might be counted on to try to step up for this purchase of assets are willing to do so. and so a question becomes, is the fed or treasury or fdic willing to say, you need to do this right now that does not seem to be the case, tyler so it's very much unclear that first republic is going to be successful in any plan to rid itself of many of these loans and securities that have contributed to what i've reported for some time, as much as a $25 billion hold n its balance sheet. if it's unable to do that the next few days as we said this morning are key, then you have to wonder whether the fdic will move to take night receivership. that's where things stand right now. kind of a fighter against the ropes, waiting for the referee to call a technical knockout, that being the fdic, hoping

perhaps they have one last punch to get them out of their corner. >> people would say this isn't whether first republic becomes the latest bank failure, the question whether this will push the administration back into making explicit or not the deposit guarantee and/or their willingness on the policy maker side of this to step up and help facilitate or take losses on some kind of acquisition none of your reporting that, but i think that hope to some extent was probably priced in a little bit here that you can kind of lean on washington, and i'm -- i'm curious where we go in the next couple days we'll have a lot of bearing on how calm or not people feel about the system more largely. >> regulators were successful, kelly, in putting a good amount of time between svb and first republic it's not as though this has been a secret we've been talking about first republic since the earliest days

when svb went into receivership followed by signature bank right after. that has been healthy for the markets. we've seen earnings from most of the regional banks if not all of them and things seem to be much calmer and so there is a belief, i think, that were first republic to be taken into receivership it would not be seen in any way as a systemic risk it still would be expensive for the fdic potentially, it would mean assessment on some of the same banks encouraged, perhaps, to participate in buying some of the assets, but it would not be systemic and that may be one motivating factor for why treasury, fed, white house, are not necessarily pushing hard here as far as i'm aware for the banks to step up there is not going to be a sale to another bank here the mark to market is too large, the hole in the balance sheet and what you do to your book

value that's always been the problem. there are plenty of potential banks that would like to have had the franchise first republic had, but they're not going to step up to take the hit to book value they would have had to do so that would happen over the last few weeks if anybody was interested that's where we are right now. and again, the next couple days, we'll see. maybe they can pull something off here with the asset sale. >> david, thank you so much for joining us this afternoon with that david faber over at the new york stock exchange let's get an analyst take on first republic with timothy coffee of janny montgomery you have a sell rating on it pick up on what david said there and their strategic options at this minute. >> a lot of that matches what we put in our report today. we've included our downgrade to sell was that best pathway forward and perhaps the only pathway forward for first republic at this point is to do an asset sale. there's a security piece they can sell, health maturity, but

the striking thing yesterday the loan to deposit ratio was near 170% that's really high to bring that down to a reasonable 100%, they need to sell loans and so the idea they would start selling or look to sell pieces of that residential mortgage portfolio makes a lot of csense in our opinion >> if they're selling loans the buyers knowing the distress situation, are not going to -- what are they going to get for the loans? anything close to par? >> unlikely. unlikely in our estimate, i think we are using a 20 to 25% discount on the sell, right. and first republic is not in a position of great strength here. there's going to have to be a discount, going to have to be give and we think it's in that 20 to 25% range. >> so then what's next if they are able to unload a sufficient numbers at a shichbts price, can they continue as an ongoing operation or if you spin

the clock forward r we looking at the death spiral of another bank >> selling assets is the first of a two-part series of events that needs to happen they need to fill a hole assuming they're able to do the second one they're likely to undertake the first one and what we see is a company that is in a better financial position from a capital standpoint, perhaps not at a great earnings standpoint, but the business can continue. we think, though, it won't continue in the same way first republic was in the past going forward it would have to be a different operation. >> tim, would you add any comments about the rest of the robert kraft -- regional banks and the fallout from them being different today than just yesterday if we recall the shares up 11% into the earnings print? >> i think there's two things that are happening right now we're in the middle of a bank earnings and the first set of

earnings were really good. western alliance gave us optimism second half hasn't been as good. first republic is kind of a signal of that. >> all right timothy coffey, appreciate your time and i have a feeling we will be talking to you again soon. >> thank you some major companies reporting giving us more insight into where companies see the market and the economy heading we start today with mcdonald's trading lower only after hitting its 11th all-time high in a row beating results, seeing traffic growth, despite price hikes. sure signs of pricing power. the ceo weighing in on the impact of inflation earlier on cnbc >> last year we faced double-digit inflation globally and even in q1, q1 we are still experiencing double-digit inflation. our outlook for the balance of the year, we do expect it to get more favorable. >> here now is peter salay, managing director of restaurants

at btig, buy rating on mcdonald's and $305 price target which he raised from 280 last week this is a company that seems to have plenty of pricing power their same-store sales up nearly 13%. i guess the ceo rightly is always worried about something he seems to be very worried about inflation. but the pricing power seems strong here. >> yeah. so thanks for having me on look, i think their fundamentals are extremely strong here. we've got double digit same-store sales growth, almost 13% across the board across geographies not just the u.s. but europe and other countries as well. that's anchored by low to mid single digit it positive traffic some of the best traffic numbers out of mcdonald's in several years. the consumer is still out spending are they concerned about inflation? sure

the inflation that they're feeling right now is 3, 4, maybe five times what normal year inflation looks like the good news is, it is starting to moderate a little bit and should be better as we get into the back end of 2023. >> i'm all for caution here, but it sounds like the ceo, i want to get your opinion as to whether he's sandbagging it a little bit calling for a mild recession. he's saying inflation is really worrisome, seeing some resistance to pricing, more resistance than we thought at the outset great to be cautious, but downplaying the company's prospects? >> look, i don't think there's any evidence that there's any sort of consumer weakness. look, the inflation definitely can lean on the consumer for an extended period of time, but we're just not seeing it and the numbers, we're not seeing it from mcdonald's or any of the other operators in the space, so maybe they're being a little bit too cautious, but i guess better

to be cautious when your trends are pretty good rather than to be too loose with it. >> got you >> in our view we don't see evidence of that. >> got you thank you very much. we appreciate it are. let's turn to alphabet set to report after the bell its revenue be growth is in focus after three consecutive quarters of earnings declines and anything that failed to wow investors. alphabet lost $100 billion in valuation the flex day and the stock down slightly into earnings we turn to mark mahaney. good to see you today. i mean, this has been picked over and picked over and yet earnings always have a way of surprising us. >> well, this is going to be your advertising marketing bellwether this is a $200 billion advertising run rate there's no bigger data point on what's happening globally and our guess is that the results are going to be kind of in line to cautious. all the calculations we've done,

that continues and soft discretionary spend google will see it too people will look for signs for what they're doing with bared. i think the product is very competitive large language model search product but the question is how will they integrate it into the core google search business that everybody uses, 90% of the population uses i don't know if we'll get that answer on the earnings call, but we need that in the next few months and what the market wants to hear what are you doing about costs. comparison made day in and day out with meta, meta aggressive, meta very aggressive with taking out costs. we haven't heard that yet from google management and i don't think we're going to hear that today and i think that will be a little bit of a disappointment i think they have plenty of room to take out costs if they do that, i think investors would reward them. >> ruth is extremely sharp and if they senses that's what

investment community is looking for, don't you think she will lean into that. >> the culture of the company, this is a very long-term investment oriented company. great mistake that they think they made during the great financial crisis was to cut investments. this is a company that's always invested for the long term they want to be careful about quickly or overreacting to market conditions. i get that and have respect for their long-term investment orientation. i think it leads to a management team and board that's not going to be as aggressive at cutting costs as you saw at meta and yeah, that investors would like to see it. i don't think they're going to get it i don't think it's likely. >> fascinating they don't want to be burned again cutting costs and maybe amid the next investment boom. thank you so much. we appreciate it. >> thank you. google's a.i. rival reporting after the bell you've heard of microsoft. shares up more than 16% so far this year. investors optimistic about a.i., but a lot of issues facing the company as well.

including slowing growth in the cloud business and a sharp slide in demand for personal computers. michael joins us now with what to watch welcome. good to have you with us this is a stock that's up, what, 15% since march 10th it is selling at a multiple of 28 times earnings. are you comfortable with that multiple going forward >> i mean, we're comfortable with that multiple it fits squarely in the five-year average but cautious into the print i think investors are grappling with competing forces into the earnings result. if you go back to microsoft's last earnings report they took a negative tone around macro they removed fiscal year targets for commercial growth and operating income growth, the stock has moved up on a.i. enthusiasm which is less likely to show up in near term numbers and the macro has not gotten better still plenty of uncertainty out there, seasonally lighter period for software we're a little bit more cautious into earnings across software,

but long term microsoft still stands to benefit. >> give our viewers a guide book to what two things you'll be looking for in this report this afternoon? what are the things you're going to be listening for? >> i mean, number one is azure growth what spooked investors the most last quarter was the rate of deceleration they communicated the azure category is the growth driver for microsoft's business. it is the long term protective moat around their business they mention they exited the quarter at a 35% growth rate despite 38% growth rate reported in the quarter the guidance for this quarter implies 30 to 31%. investors want to know if that's conservative or where that growth rate settles. and then number two is margin. how much cost control can microsoft put in to just help protect this business model during a period of tougher growth very clear on the last earnings call around cost controls and

microsoft has been focused on profitable growth. looking for margins to stabilize. low single digit it eps growth this quarter but expect to rebound to 15% growth next quarter. this is an important hurdle for microsoft to clear with the earnings report. >> listen for azure growth and margins. thank you so much. >> thanks for having me. lively afternoon further ahead on the show another key company report on our radar. jetblue. posting a quarterly loss, but joining other carriers in forecasting a profit for the second quarter on strong travel demand we will speak to the ceo. >> the race to 2024. president biden announcing his re-election campaign with a focuson economy. what it could mean for policy and markets next electric dream days are here. come in now and experience the intense thrills and incredible offers on any of five

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welcome back president biden launching his re-election campaign promising to full his economic vision. with the economy and inflation on everybody's mind he might have to deal with the debt limit. eman javers is in washington for us. >> hanging over the debt ceiling negotiations is the sense of uncertainty about when the deadline for default is. the so-called x date is the date when the u.s. government can no longer meet its financial

obligations, but no oknows when it's coming. janet yellen said june 5th is the earliest date which was seen as the most pessimistic scenario the congressional budget office says it could come between july and sent of this year. one problem is capital gains tax revenues have been coming in very light, very, very light, this year, in part because 2022 was a brutal year on wall street for the year remember the dow was down 8.8%, the best of the three major indexes. all three averages had the worst year last year since 2008. that represents a lot of capital gains that didn't happen in 2022 so on friday, goldman sachs analyst pointed out that tax receipts are now running 35% below last year and bank of america estimates that the date could shift from mid-august to late july as a result of that shortfall and all of that puts more pressure now on house

speaker kevin mccarthy who is trying to move his 320-page debt ceiling bill through a deeply divided house of representatives and expected to start that bill through the committee process today. but that bill likely won't go anywhere in a democratic senate and the white house said president biden would veto the bill if it even passes in congress a lot at stake here. no clear solution on the horizon. >> a lot more interesting before we know it thank you. taxes, of course, always a key issue in any presidential election it could be more so this time around robert tranfrank here to lay ou biden's tax priorities >> there are three proposals that we're going to hear a lot about during that presidential campaign first of these and his favorite is the billionaire minimum tax, a tax rate of 25% for people worth more than $100 million, and it includes unrealized capital gains as income. you're going to pay this tax on any gain of a stock or property even if you didn't sell it for that tax year.

he's also pushing to doubles capital gains rate from 20% to 39.6% for those who earn more than mailen a year in new york city or california that total capital gains tax would be over 56% if you count state and federal and finally perhaps most lucratively he wants to raise the corporate tax rate from 21 to 28%. biden says the plan is to, quote, reward work not wealth. critics say this would hurt the economy and investment and taxing the unrealized gains would be very difficult to administer, especially for this irs. >> thank you very much robert frank. for more on biden's announcement and what election will mean for markets and the economy brian garner, stifel's chief strategist and also co-host of the perspective podcast. i didn't know that 1.3 x. makes everyone sound mickey

mouns. if i had to put 1.3 x spin this forward if biden is president again what would he do talk about what implications are here. >> yeah. so i think robert hit the big themes on the tax side i think it's a continuation of what we've seen in the first term and i think that was kind of the message that was played out this morning in the announcement and speech to the labor union. it's a lot of unfinished business what did not get passed in the build back better bill that became the inflation reduction act, it's kind of returning to the tax theme of increasing taxes on the wealthy, a play on the populism that kind of has engulfed the country both sides. one side trying to do a different theme of populism. corporate taxes, higher personal income tax rates, increasing the basic top rate for income above $400,000, but i think that would be back in a biden second term

as well. >> running on raising taxes is rarely a recipe for success in my long experience of watching things how would you grade the president's legislative accomplishments so far, and why, if they are accomplishments, is that message not getting across? >> grading is tough because i didn't like being on the other side of that when i was a student and wasn't particularly good at it either. from the student side. now that i goat play teacher for a second, i would give ate b, b-plus on political execution. he came into the term with very narrow majorities in the house and senate, there was a lot of skepticism of what he could or could not get through, more skepticism that he couldn't get through much of his package. and he did pull off some

impressive legislative wins despite all that there's a lot he didn't get through. the tax portion. democrats in those first two years of the biden administration when they controlled congress did not pass the tax package. i think they are going to go back and try it again. he ran on it the first time and while, tyler, i agree that raising taxes is not a great political strategy, we live in very interesting times to say the least. the politics of the era are much more complicated than they used to be. i think republican voters don't care about -- taxes on the wealthy as much as they used to. suburban voters have drifted towards the democratic party and if it's a rematch of 2020, trump versus biden, i think biden has a little bit more runway go on taxes with a caveat let's see what economy is doing. i think that the main thing of

that race is, do you want to go back to the chaos of trump years or stick with the steady hand and i think the tax issue probably takes a back seat to all of that. >> let me just ask one follow-up question, if the president was not able to get the tax portion through a congress that was democratic, you're not going to tell me you expect it to get through the current congress >> no, no, no. let's fast forward to 2025 let's see what the next congress looks like if it's the current -- if it's the current structure, democratic senate, republican house, split some way, then the chances of getting his tax package through are close to nil. let's just say for a second that we -- that biden wins and carries through democratics in the house and senate, and they recapture that, he faces the

same problems he did two years ago in getting these tax pieces through congress i'm skeptical either way and saying, as we're getting ready for campaign season, these headlines are coming back. my advice to investors would be to take them with a very large grain of salt. i'm very skeptical that they're going to pass, but you're going to hear more about them and, you know, donald trump actually -- and trump advisors more importantly, have not been as anti-tax hike as other republicans, so i don't know how much trump pushes back on that biden could have a little leeway on this. again, i'm skeptical that it happens, that it gets passed by congress in '25. >> maybe it's a reasonable running point. i mean, something to run on, tax the rich, soak the rich, maybe that works because the possibility -- what i'm hearing you say the possibility of getting it through congress is nil. brian, we have to leave it

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hello, everybody i'm contessa brewer. the five adult suspects in the dadeville, alabama, mass shooting appeared in court for their bond hearings. four people were killed, 32 injured in that shooting that happened at a sweet 16 birthday party april 15th each person has been charged with four counts of reckless murder but a motive for that shooting still unclear a private japanese company attempted to land a spacecraft on the moon today but lost communication moments before its scheduled landing. the ceo for the tokyo based ispace company says the landing attempt was deemed unsuccessful since they have been unable to reconnect to the lunar craft if successful, the landing would have made ispace the first private enty to complete the feat. and the fda granting accelerated approval for biogen's als drug that treats a

rare form of the disease it requires biogen, and its codeveloper ionis to further study the drug and verify its clinical benefits. if a subsequent trial confirms the benefits the fda can grant traditional approval for the medication kelly? >> thank you very much contessa brewer. still to come on "power lunch," jetblue joining holiday airlines posting a loss but promising profits ahead. both airlines citing strong demand with more come top jetblue was one more project on its radar screen will the justice department succeed in blocking its purchase 'lspk tt? wel eatohe ceo next. ♪♪ at morgan stanley, old school hard work meets bold new thinking. ♪♪ at 87 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities

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welcome back to "power lunch. shares of jetblue are higher despite reporting a loss revenue however beating estimates. the company is positive, positive commentary on travel demand an promises of profit ahead. keeping sour investors at bay. see the airline stocks jetblue up 5.5% for the year however, the company is lagging the rest of the group over the past 12 months, though leading

it this year so far. all that said, strong demand may be holding up, holding the stock up, but will it be enough to drive profits? let's get to phil lebeau with jetblue's ceo robin hayes. >> thank you thanks for joining us today. let's get to the main point. yes, you have a loss in the first quarter but the second quarter guidance people are focused on you're forecasting a profitable second quarter what's your perspective? >> hi, phil. good to see you again. yes, you know, q1 was a loss usually it's our weakest quarter. we did better than we had originally guided, so we were pleased with that and great effort by the jetblue team as we come into two what we're seeing is strong demand, international is extremely strong, domestic is strong, and, you know, that's comparing to some pretty tough comps last

year because if you think about this time last year that's when we really started to see the demand for travel start too. i think we feel really good going into the peak. a combination of strong demand, lower fuel than we saw in q1 and also keeping our costs in check. i think it will give us a good setup. >> your guidance in terms of the second quarter coming in a smidge below where the analysts are expecting it to be and you mentioned during the analyst call you're seeing headwinds out there, in particular the faa constraints, the travel restrictions that you guys are putting in place with regard to flights into new york city how much is that going to be a headwind in the second quarter and into the third quarter >> well, it is a headwind, phil. new york is -- we have a significant amount of capacity that is in and out of new york, our largest market that we fly to, and the faa has told us and other airlines that they are far

from fully staffed in fact, in the new york area, air traffic control facility, they're about 54%, 54% of their staffing requirement and by the way, phil, that's based on the 2014 number. so if we think about how much air traffic has grown since 2014, and so what we did was we have reluctantly decided to reduce flights in and out of new york this summer, by doing that it's going to make the service more oprable if we didn't do this, the faa told us delays would nearly double in the new york area. for those of you who fly in and out of new york it already can be challenging so we wanted to do what we could as jetblue to offset and try to mitigate the impact of a shortage of traffic controllers. >> it's kelly here i just want to jump in and bring it back to the spirit deal, because i'm thinking about this in light of president biden's

announcement of his run for re-election and that sort of thing. i mean, it's pretty clear the administration and the agencies have no interest in a lot of deals happening kind of period why not just walk away how far are you willing to take this are you going to be hung up with this for a long time and if -- did you know going into it, hey, it's just going to be nearly impossible to get anything done, but it's that important to us or do you think it's become more clear in the ensuing months it's hard to get these things done? >> well, i think it's important and hard so important because, again, we've talked about the challenges in the northeast because of the shortage of air traffic controllers and for jetblue that means we need to diversify and bring the jetblue product, jetblue low fares to more customers across the country and that's what our merger with spirit will do it will create a true

high-quality, low fare challenge to the big for the issue in the u.s., we have four large airlines that control 80% of the market. the rest of us have 20% between us you know, how come the -- how can the number six and seven player become the number five player with everything that jetblue stands for be anti-consumer? it's not it's pro-competitor. we are in the hands of a judge we have a court scheduled or we have a court case scheduled in october. we're going to make our case we feel really good about our case the timeline is progressing. when we announced the agreement with spirit last year to merge, we said we expect it to close in the first half of 2024 and that is, indeed, still the case. >> robin, it's phil again. billy nolen the acting head of the faa will be leaving this summer there is no nominee right now to become the permanent head of the faa.

is this uncertainty around the faa how much is that hampering growth for the airlines overall? i'm not just talking about jetblue, but the domestic airlines and airline service here in the u.s., how much is that a hindrance >> yeah. i was very sorry to see billy step down, phil. i understand why he's done a good job as an acting administrator and we haven't had an administrator now for a very long period of time we need an administrator we need to get key roles at the faa filled we have to hire air traffic controllers. we have to train air traffic controllers and upgrade the technology in the system to bring the u.s. up to a similar technical level of capabilities as other countries have. all of these issues, phil, as you know, have been issues that have been out there for many years. so what we want to do is work collaboratively and together with the faa to get these issues addressed. this just can't go on.

we should not be in a position where jetblue's ability to serve new york is limited because of the significant staffing constraints. all of us in new york are proud of new york. we're trying to bring the city back we have a passionate mayor who wants to bring new york back we want to bring tourists back to new york. we want to get hotels open and do loads of exciting things. it's a wonderful, vibrant city but we won't be able to fly everyone who wants to come to new york here this summer and we have to address it new york is singularly disadvantaged by the atc staffing shortages because they're worse in new york than anywhere else in the system. >> robin, i know we will be talking about this a lot unfortunately. a lot more in the future i appreciate you joining us from jetblue's headquarters in new york tyler and kelly, i'll send it back to you. >> thank you still to come we'll check on first republic and the rest of today's market action.

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and book your free hearing evaluation. welcome back to "power lunch. we have stocks at pretty much fresh session lows here with the dow down 331 points.

the s&p to 4077. 1.5% drop. first republic shares are down bob pisani has more details at the new york stock exchange. bob? >> we were going along, it was a weak day, but got weaker around 1:00 when there were reports out that the first republic was weighing an asset sale of up to $100 billion now remember, they were already down noticeably on yesterday's earnings reports that was a 40% drop in deposits. that was a lot steeper drop in deposits than anybody had anticipated. but we dropped even more on that this actually moved the overall market it moved bond yields lower which was a surprise to a lot of people and moved the regional banks. they're all moving lower today notably and remember what happened when the earnings came out for the regional banks they were generally okay, not worse than anticipated, and the stocks a couple weeks ago rose briefly on this as a result of what's been happening the last day or so, particularly today.

these are all now trading towards the lower end of their recent trading ranges from a month ago going back to the banking crisis towards the lower end and that's an issue for the markets. take a look at the kre, the regional bank etf. this is a basket of all the large regional banks this is essentially a new low here i'm showing you a one-year chart but that's a 2.5 year low. we are back down to where we were right at the height of the banking crisis in the middle of march here s&p 500, again, rather surprisingly, did it move the market here. we moved 20 points on the s&p and you can see after moving up recently as we entered earnings season for the last several days, we lose a -- lost a lot of momentum that we had and as a result cyclical names are no longer helping the rally it's defensive now consumer staples and health care primarily. back to you. >> thanks very much. still ahead, the vix is in a new product shaking up the way traders can hedge against

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welcome to "power lunch. stocks are lower and bond yields falling as well.

let's go to rick santelli. >> i'll tell you what, tyler, an interday of 2-year note yields have plummeted the 2-year note auction wasn't spectacular but it was above average. traders waited to continue buying, pushing yields down. the 2-year note auction was in the way. then, too, everybody talking about it today that goes back to 1980 you won't find a lower m-2 and when it comes to the cboe, 50-year birthday today, 30 years for the vix and two days old for the one-day vix. ed, congratulations. everybody wants to know about your new one-day vix product >> we wontd to continue to bring new measures to the market of investors of all shapes and sizes around the globe our 30-day mix number wasn't capture the majority of the value, on the short end of the

curve, meaning zero days from expiring, options opening and closing in one day or one-day options like tomorrow. a lot of volume there. we need to measure that volatility >> prior to options, strategies were much less able to fine-tune tos fine-tune, to replicate the type of performance in a portfolio that strategists wanted. it's changed the landscape in a huge way >> it has. investors want to trade the news cycle. look at the news you announce today, every day, all day long, and having to lose options that are one week out or 30 days out or six months out, that's not what investors have been trending to. they want to trade today they want to trade this news cycle. they're able to fine-tune their portfolio on exposure based on the news of the day. that's what we look to capture >> when it comes to the zero versus one day, how much activity just today alone, what's the difference between the one-day and the one-month vix right now?

>> one-month vix moved about 55% today. the 30-day number about 16%, 17%. so we were not capturing in that 30 days what's happening today and tomorrow >> and traders are all about the here and now kelly, back to you >> fascinating stuff thank you both rick santelli. coming up, the beat goes on this earnings season thanks in no small part to pricing power we'll look at companies able to cover rising costs and for how much longer they can [phone: starting route.] technology helps us navigate to work. [phone: go straight.] but, to navigate the complexities of modern work... [phone: turn left.] ...you need more than technology. you need cdw. [phone: you have arrived.] so we'll implement cloud based microsoft modern work solutions like microsoft 365, teams and azure, so your teams can collaborate with zero trust security anywhere. [phone: destination ahead.] microsoft makes modern work possible.

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welcome back, everybody. big theme of this earnings season is pricing power, good news for company, not so much for consumers. it's helping to fuel some beats here kristina partsinevelos is digging into this. >> higher prices that just don't seem to want to come down anytime soon, even though there are signs raw materials are starting to moderate just a bit outside of a few retailers most companies just don't want to give shoppers a discount. the maker of huggies and kleenex, kimberly-clark increased prices 10% in its most recent quarter volumes did fall 5%, but margins still grew compared to last year the ceo says it has to do with a better-than-expected elasticity impact on volume in other words, the increase in prices isn't drastically reducing demand. pepsico prices, look at that up, up 16% volumes only fell 2%

coca-cola pushed up prices 11% volumes increased 3% procter & gamble, prices up 10% and gross margins grew sherwin-williams, the maker of agreeable gray/pink color popular with our producers discussedsoftness but earnings toppedestimates why? higher prices. mcdonald's ceo is the only one who said consumers are starting to push back on a few items. but overall, traffic still grew because people want their big macs all of this points to inelastic demand people may be grumbling about prices, but they are still willing to pay up. >> yeah. and even though -- we had the quote from that mcdonald's ceo, did that story earlier on today. come on over here. we have 28 seconds left. 30 seconds excuse me. he said he was feeling some

pushback but they raised prices 13% year over year and still seeing high demand >> exactly we talk about a weaker economy, inflation hurting everyone, yet we are still paying as we saw on that board >> people seem willing to step up >> for now >> who do we do with the remaining ten seconds? >> catch up on our day chitchat >> thanks for watching chose "closing bell" starts right now. >> i'm mike santoli in for scott wapner we are live from post 9 at the new york stock exchange. this make-or-break hour begins with an end to the calm, the first 1% daily drop in the s&p 500 in more than a month appears under way on a fresh round of economic slowdown concerns and mixed earnings results the s&p 500 is down almost 1.5%. that leads us to our "talk of the tape" and text moment of truth. will impending